Feeds

Google India slapped with £8.7 MILLION tax penalty

Search giant accused of misleading tax office

Providing a secure and efficient Helpdesk

Google is facing more embarrassing revelations about its tax dealings after its Indian business was accused of misleading the government, violating accounting rules and slapped with a Rs76 crore (£8.7m) fine.

The penalty order, which Google is appealing, relates to the tax year 2008-9 and if upheld will ensure the search giant pays tax on all of its Indian advertising revenues in India.

The tax office said Google India credited Rs119.83 crore (£13.7m) to Google Ireland for distribution fees without deducting tax at source according to the tax treaty between the two countries, Economic Times reported.

The penalty order, seen by the ET, states the following:

The entire activity of (Google's) AdWords Programme and the revenue earned thereon has happened in India with both the advertisers as well people making use of the advertisements situated in India. To this extent, the income of M/s Google Ireland Ltd was held to be accrued as well as arisen in India itself.

The situation is complicated further as many regional Google businesses route their earnings via the Netherlands to an entity in the tax haven of Bermuda – an entity which is actually a subsidiary of Google Ireland, according to ET.

The tax office has now apparently recalculated Google’s profits to take account of the “excessive and unreasonable” distribution fees to Google Ireland. It also slammed the search giant for breaking local accounting laws by declaring "revenues on a net basis instead of showing it on a gross basis".

India appears to be taking a more robust approach to The Chocolate Factory’s tax avoidance than is happening in the UK, although Amazon, Google and Starbucks all got a grilling by MPs at the Public Accounts Committee this week.

Google was singled out for being “immoral” in its funnelling of funds out of the UK. Despite generating £2.5bn in UK sales in 2011 it paid tax of just £3.4m.

Things could get tougher in the UK too, with the chancellor rumoured to be announcing new tax avoidance plans in the autumn budget. ®

Providing a secure and efficient Helpdesk

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Special pleading against mass surveillance won't help anyone
Protecting journalists alone won't protect their sources
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Apple's iPhone 6 first-day sales are MEANINGLESS, mutters analyst
Big weekend queues only represent fruity firm's supply
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Bill Gates, drugs and the internet: Top 10 Larry Ellison quotes
'I certainly never expected to become rich ... this is surreal'
Big Content Australia just blew a big hole in its credibility
AHEDA's research on average content prices did not expose methodology, so appears less than rigourous
EMC, HP blockbuster 'merger' shocker comes a cropper
Stand down, FTC... you can put your feet up for a bit
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.